By Karl Stenerson
Market Reporter - Fertecon
Informa Agribusiness Intelligence
Here is a breakdown of wholesale prices and trends by the various fertilizers:
AMMONIA
International
The ammonia market has pushed upwards again as tight supply continues to force buyers who are short to increase their price ideas.
Algeria has yet to see a resumption of supply at Sorfert, Sabic has a plant down as does Qafco for scheduled maintenance and Ma'aden added to the squeeze by taking ammonia down at the MWSPC plant for a two-week turnaround. All these outages are combining to make it very difficult for buyers to secure December tonnes. Middle East fob prices ended November at $305-340 mton fob, up from $270-325 in October.
There has been some increase in supply from Russia; TOAZ finally restarted the sixth line. Ameropa however has many commitments to fulfill against contract business. Yuzhnyy fob prices climbed to $310-330 mton at the turn of the month, up from $270-290 in October.
In the U.S., Yara and Mosaic settled the December price in Tampa at $345 cfr, an increase of $40 over November.
With turnarounds coming to an end in December, there is concern prices could slide if supply returns to normal. Combined with this is concern that the U.S. could see further exports as the domestic season will soon draw to a close. This could see further volumes hit the export market. However, until supply issues are worked out the short-term outlook for ammonia prices remains firm.
Domestic
The direct application season kicked off in November and domestic prices have held steady to firm.
Weather conditions in central Illinois are permitting farmers to continue applications post-Thanksgiving. Farmers in Kansas, Iowa and Nebraska are also out in the fields running ammonia in force. Some sellers are running tight on supply but a major domestic producer is heard to still have sufficient product available. A few terminals are on allocation. Seeing solid demand prices in the Cornbelt appreciated slightly to $325-360/ston fob warehouse/pipeline from $325-350/ston at the end of November.
Recent warm weather in the Northern Plains allowed for another small ammonia run. Prompt prices were at $325/ston delivered into North Dakota. Dakota Gasification announced Q2 prepay prices at $395/ston delivered into North Dakota. Beginning Q1 prompt prices are scheduled to increase to $350.
In central Texas and Oklahoma, ammonia application continues for row crop. Pricing was unchanged this month with the Gulf Coast still around $300-305/ston fob and $300/ston ex Oklahoma plant.
Major domestic producers have yet to release spring prepay pricing. It will be interesting to see if Koch comes out early and aggressive as they did this year for fall prepay and summer fill. Prepay prices are expected to be higher than current prompt values considering the decent, maybe above average, fall run and continued firmness in the international market.
UREA
International
Urea prices were down significantly by the end of November. The cancellation of the NFL tender in India was the first shock wave, followed by lower imports into the U.S. Brazil, which is well ahead of its import volumes in 2017, was also a factor.
With India out of the market, traders were forced to cut prices to find homes for their urea cargoes. Middle East fob prices were down to $215-230 mton by the end of November after trading as high as $290 in October.
Buyers in Brazil are well ahead on their purchasing for the year and traders were forced to accept prices at the $225-240 cfr level, down $75 from early November.
India's stocks are low and a new tender is expected shortly. However, with the Pardis 3 plant in Iran now running, most tonnes sold will be covered from this origin. The market could slip further before staging a modest revival in January, but only after India has one of its unusual January tenders to hoover up low-priced tonnes.
Domestic
NOLA urea barge prices trended downward in November seeing prices drop to $210-218/ston fob the last week of the month after trading as high $245-255 in October. Some buyers stepped in and added small positions after the price declines but many continue to take a wait-and-see approach.
Interior prices moved lower in reaction to recent weakness in the NOLA market. River terminal prices are generally around $245-255/ston fob, down from $275-285 in October.
New production at Koch's Enid, Agrium's Borger, CF's Port Neal, and OCI's Wever were all reported to be running well at the end of the month.
Dakota Gasification is on track to begin commercial production at its new urea plant in Q1. The company plans to release some Q2 prepay pricing in the coming weeks. The plant will provide an additional 1,100 short-ton-pe-day capacity to the domestic market ahead of the spring season.
The NOLA price spread to the Arab Gulf continues to tighten as international prices fall further relative to NOLA. With the international market still soft we expect domestic prices will continue to be under pressure as buyers remain on the sidelines.
UAN
UAN prices were unchanged to slightly high in October with very little new business transpiring. Producers continue to be bullish citing tight order books through Q1. Buyers, on the other hand, are sensing downside price risk for nitrogen. This difference in market assessment has halted new prepay purchasing.
No fresh UAN barge trade has concluded at NOLA, where offers are reported to stand at $160-165/ston for December and Q1. The U.S. East Coast is equally quiet, with no new import business concluded. EuroChem is indicating $195 mton cfr for December loading, up $5 on previous business.
Q1 values on the River and ex plant in Iowa are generally around $185-190/ston fob for 32%, up from $175-190 last month. Cincinnati continues to be more competitive with prices around $180/ston fob. Spring prepay prices are $10 higher in the $190-200/ston fob range.
Prices in the Southern Plains have moved slightly firmer in the past couple weeks. Ex plant prices in Oklahoma range from $170-180/ston fob, up about $10 from last indications.
The short-term outlook for UAN prices is stable. With urea looking mostly softer, UAN buyers will likely adopt a wait-and-see approach, which will curb any attempts by sellers to increase prices over the short-term. However, there are still bullish arguments on the supply side -- CF continues to export more than ever before, breaking into a new market of Ukraine recently, and spot imports are not currently workable with domestic prices at a discount so imports are limited to contract tons.
PHOSPHATES
International
Price levels in the phosphate market have moved up sharply this month due to the sharp hike in raw material costs and announcements of supply cutbacks. The continued increase in sulphur prices, particularly for the Chinese market, has driven fob values for DAP in Asia up over $30/ton during November.
Price levels in the Americas have benefitted further from the imminent closure of Plant City, potentially squeezing supply for the region going forward. Mosaic sold DAP at $385 mton fob to Latin America at the end of November, up $40 from sales last month.
With limited availability from most producers for the remainder of 2017, phosphate prices look set to remain on a firm footing in the coming weeks, particularly if any unexpected demand surfaces.
Domestic
Barge prices for DAP climbed further in November capping the month off at $350-355/ston fob NOLA, attaining $10 increases from last month. MAP barge prices are also higher at $370-372/ston fob NOLA.
Supplies are tightening, especially of MAP, due to better than expected retail demand for winter wheat plantings and for applications ahead of spring row crop. This has led to firmer prices in the interior as well as the barge market.
Fall applications continue across the Midwest. Retailers are returning to the market for a load or two at a time to finish up the season. Weather has been favorable and with some harvesting still taking place prompt retail demand looks to continue into December.
Truck DAP prices off the River are around $380-385/ston fob, up slightly from $370-380 in October. MAP prices vary depending on local supply but are generally about a $20 premium to DAP. Some retailers are being forced to switch to DAP due to nonexistent MAP supply while some others are choosing to make the switch due to the relatively attractive price.
The short-term outlook for phosphates is firm. With tight supplies there is only room for prices to move up while the fall application season rolls on. With inventories needing to be replenished prices are apt to stabilize after the season and the only downside risk can be seen when imports begin arriving later in December and into January.
POTASH
Retailers are returning to the market as fall potash applications continue across the Midwest. Cheap offers at $245-250/ston fob River warehouse are beginning to dry up.
A change in the weather in the Cornbelt has renewed farmer interest in dry fertilizer applications as well as the end-of-harvest work. To cover this demand some bigger buyers stepped into Illinois and Cincinnati River markets and cleaned up a lot of the potash priced at $250. Most River markets are now at $255/ston. With some harvesting still taking place, prompt retail demand looks to continue into December.
Mosaic posted a $5 increase on its potash prices, bringing the NOLA barge price to $230/ston fob. PCS and Agrium have not announced winter fill or prepay prices yet. Some have speculated the two companies will wait until the merger is finalized before pricing is released.
NOLA potash barges traded higher at $225-230/ston fob at the end of the month, up from $218-225 in October. As noted above, Mosaic is reportedly offering $230/ston fob and an importer was now also heard to be offering Q1 barges at $230/ston fob for Russian product.
Most reports suggest a strong fall application season. With inventories needing to be replenished before spring we expect suppliers will achieve slight price increases this winter.
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Editor's Note: This information was supplied courtesy of Fertecon, Informa Agribusiness Intelligence.
(BS\SK)
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